Pivot to Nowhere?

Was it Fun or Did it Deliver Results?

I’ve shaken hands with too many founders who have sore hands. Why? They’re busy patting themselves on the back for making a pivot, without seeing if it had any impact on the business. (Remember that a pivot is a significant change to one of the nine key business model elements.)

Entrepreneurs are always in a hurry, and believe that “in a hurry” is part of their job descriptions.  So they press onward, usually in a big-ass hurry.  “We pivoted,” they say, and they just keep moving, without (a) looking for proof that the pivot had dramatic, curative impact, or (b) seeing the pivot bring repeatable, scalable profitable change.  Making the pivot is not important—its sustainable business impact is what matters. Product/market fit can’t just be “declared,” no matter how many pivots a team has made. And startups can’t simply “move on” or move forward to focus on other elements of their business.  Why not??

Without product/market fit, founders simply don’t have a business.  Too few founders “get it,” and don’t understand the centricity and importance of “fit,” and the need to go back, retrench, rethink and—quite often—rebuild much if not all of the business model to make it work.

When it works:

I had the truly delightful pleasure of attaining sustainable, scalable (and highly lucrative) product/market fit in startup #7, where after about three years we finally got it right:

  • we knew our target customer segment precisely (and also knew who weren’t our customers)
  • when we found someone in our segment, he or she bought—big
  • we developed a method for finding these customers and getting them to self-identify, making the sales process far easier and more cost-efficient than it was the month before

Where was the evidence?  It was on the telephone—where our “perfect” customers were calling almost nonstop, and practically throwing money at us, begging us to come and pitch them or send them a proposal without any romance or pre-sell. It got so bad that we actually started charging to make out-of-town sales calls (agreeing to credit the per diem and travel costs if the client signed up for a six-figure consulting project).  It was magical…it’s the real definition of product/market fit—customers grabbing your value proposition (or product) out of your hands.

When it doesn’t:

Product/market fit is binary. Either you have it or you don’t. Some clear signs you don’t have it:

  • Stagnant MOMs or WOWs(that’s week-over-weeks, fyi)Whether you’re measuring revenue monthly or (much smarter) weekly, if it isn’t increasing by at least 15% a quarter, there’s no traction. No traction=no fit.
  • Flat or Increasing CAQs:  If every new deal is the result of unsustainable customer acquisition costs or heroic sales to friends, cousins or others, finding and closing customers is not getting easier, as it should. Big danger sign.
  • Pipeline Inacuracy:  Estimates of revenue and other key metrics suffer from continuous hyperoptimism. Perhaps the most dangerous sign of all
  • Key people departing earlier or dressing better:  The troops often have a keener sense of a stalled-out company than its leaders do, in part because they have less reason or less need to believe in the company. When they head home, or out for interviews, it can be a bellwether of product/market misfit.

NEXT: Avoiding the “Garbage In, Garbage Out” Syndrome

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